Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Closing Report: Gold and Silver Gain About 1%
By: Chris Mullen, Gold Seeker Report

Northern Vertex Files Preliminary Economic Assessment Report for the Moss Gold Mine in NW Arizona
By: Northern Vertex Mining Corp.

Does The CoT Structure Prohibit A Rally?
By: Craig Hemke

Harry Dent’s Gold Prediction Invalidated
By: Przemyslaw Radomski, CFA

SELLING OUT OF PRECIOUS METALS AND BUYING BITCOIN…. Very Bad Idea
By: Steve St. Angelo

The Bitcoin Bubble Explained in 4 Charts
By: Jake Weber

VXX Sends an Awesome Message from Another Galaxy
By: Rick Ackerman

Geopolitical Risk Highest “In Four Decades” – Gold Demand in Germany and Globally to Remain Robust
By: GoldCore

Asian Metals Market Update: November-22-2017
By: Chintan Karnani, Insignia Consultants

Gold Seeker Closing Report: Gold and Silver Gain With Stocks
By: Chris Mullen, Gold Seeker Report

 
Search

GoldSeek Web

 
Greece and short positions


 -- Published: Monday, 29 June 2015 | Print  | Disqus 

Weekly market report by Alasdair Macleod, Head of Research, GoldMoney

_________________________________________________________

 

Hedge funds and high-frequency traders have finally forced gold into a US dollar loss this year as shown in our introductory chart, but silver is still in positive territory. This week gold declined $29 with a break from the $1200 level to $1171, and silver fell 40 cents to $15.70 early this morning in European trade.

 

As I wrote last week, in the run-up to the half-year precious metals’ prices face a conflict between window-dressing for the lowest possible valuation, and the systemic risk that is Greece. The window-dressing motive is still there, but the pressures from Greece lessened on Monday when everyone thought a deal had been agreed, leading to a relief rally in equity markets and a corresponding fall in gold. As the week progressed it became clear that the proposed deal was not acceptable to the troika* of the IMF, ECB and the European Commission, but precious metals continued to drift lower.

 

Understandably, the troika observed that the Greek government’s proposals were harmful to the economy and ultimately will make her debt less secure. The lack of resolution therefore increases Greece’s systemic risk, making precious metals more attractive as a hedge.

 

But not for now it seems. Monday’s false hopes of a Greek resolution allowed the bears on Comex to drive gold and silver prices lower, which suits both commercial traders and money managers. The position however has become extreme, with money managers’ short positions the highest they have ever been. This is shown in the next chart, which is updated to 16th June (the dotted line is the long-term average for reference). 

 

In the last ten days Open Interest has risen by an extra 21,000 contracts, which suggests that Managed Money shorts are even further into record territory, as much as 100,000 contracts. At the same time, Managed Money long positions are only a little below average, suggesting some hedge funds do have an eye on systemic risk.

 

The extreme short position is therefore controversial with a minority in the investment community. Monitoring sentiment generally, we find a growing influential minority of big investors expressing serious concerns over the failure of monetary policy and the distortion on market valuations. These sentiments appear to be reflected in speculative hedges in precious metals on Comex. The preponderance of sellers has given the big four commercial traders an opportunity to reduce their shorts to a level book, which is significant given their historical net short position has averaged over 90,000 contracts. Swaps, mainly representing bullion banks hedging risk elsewhere, have also reduced their exposure to historically low levels.

 

Market sentiment is therefore telling us the shorts are like lambs, which as they put on weight are getting closer to their appointment with destiny. The potential for a bear squeeze against money managers short of gold futures is greater than it has ever been. Market insiders, whose greatest risk is always from sharply rising prices, have squared their books telling us that they see this risk as well.

 

Meanwhile Open Interest in silver is not only at an all-time record, but continues to rise on falling prices, which is our last chart.

 

  

 

This is very unusual. Normally, Open Interest rises in phase with the price; instead it is rising on a falling price. In this case, Commercials including Swap Dealers have cut their net shorts by betting against new Managed Money short positions. The result is that outstanding bets in this market now exceed a billion ounces, not only a new record by far, but 115% of annual global mine production.

 

Next week

Monday

 

UK: Nationwide House Prices, BoE Mortgage Approvals, Net Consumer Credit, Secured Lending, M4 Money Supply, GfK Consumer Confidence.
Eurozone: Business Climate Index, Economic Sentiment.
US: Pending Home Sales.


Tuesday


Japan: Construction Orders, Housing Starts.
UK: Current Account, GDP (3rd Est.), Index of Services.
Eurozone: Flash HICP, Unemployment.
US: S&P Case-Shiller Home Price, Chicago PMI, Consumer Confidence.

Wednesday


Japan: Tankan Survey, Vehicle sales.
Eurozone: Manufacturing PMI.
UK: CIPS/Markit Manufacturing PMI.
US: ADP Employment Survey, Manufacturing PMI, Construction Spending, ISM Manufacturing, Vehicle Sales.

Thursday

Eurozone: PPI.

US: Initial Claims, Non-Farm Payrolls, Unemployment, Factory Orders.

 

Friday

 

Eurozone: Composite PMI, Services PMI, Retail Trade.
UK: CIPS/Markit Services PMI.

 

* The term Troika, which comes from the Russian meaning 'group of three', is used to describe the European Commission, International Monetary Fund and European Central Bank

 

Disclaimer: The views and opinions expressed in the article are those of the author and do not necessarily reflect those of GoldMoney, unless expressly stated. Please note that neither GoldMoney nor any of its representatives provide financial, legal, tax, investment or other advice. Such advice should be sought form an independent regulated person or body who is suitably qualified to do so. Any information provided in this article is provided solely as general market commentary and does not constitute advice. GoldMoney will not accept liability for any loss or damage, which may arise directly or indirectly from your use of or reliance on such information.

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

 

GoldMoney

GoldMoney is one of the worlds leading providers of physical gold, silver, platinum and palladium for private and corporate customers, allowing users to buy precious metals online. The easy to use website makes investing in gold and other precious metals accessible 24/7.

Through GoldMoney’s non-bank vault operators, physical precious metals can be stored worldwide, outside of the banking system in the UK, Switzerland, Hong Kong, Singapore and Canada. GoldMoney partners with Brink’s, Loomis International (formerly Via Mat), Malca-Amit, G4S and Rhenus Logistics. Storage fees are highly competitive and there is also the option of having metal delivered.

GoldMoney currently has over 20,000 customers worldwide and holds over $1billion of precious metals in its partner vaults.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey's anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers' assets with independent audit reporting every 3 months by two leading audit firms.

Further information:

Visit: Goldmoney.com  or view our video online


| Digg This Article
 -- Published: Monday, 29 June 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.